Mastering grant management: Best practices for success

When nonprofit organizations receive a grant, they are entrusted with vital funds to help achieve their mission. For many organizations, these funds are closely correlated with their overall impact.

It’s easy to get excited about the possibilities of grant funding, especially when you’ve just been awarded a grant. It’s just as important, however, to remember that grantmaking organizations have priorities and goals of their own, and they typically want to ensure their funds are used effectively. Most grants come with stipulations regarding how the funds can and cannot be used, helping to ensure good organizational outcomes and alignment with funder values.

Grant management is the process of monitoring, tracking, and reporting on grant funds throughout a grant’s lifecycle to ensure efficiency, impact, and compliance with grantmaker regulations. Whether you’re a nonprofit organization, academic institution, or government agency, implementing best practices in grant management is essential to getting—and keeping—these important funds as part of your overall fundraising strategy.

In this guide, we introduce grant management best practices to help you manage your funding well and set your organization up for future success.

The benefits of an effective grant management process

When you demonstrate responsible and impactful use of grant funding, you signal to funders that you are worthy of their philanthropic investment. This credibility extends well beyond the life of the grant and often opens the door to additional funding opportunities. Good grant management leads to new, larger, and more transformational grants in the future.

In contrast, poor grant management can be costly. Mismanagement of funds can result in financial audits, damage to the organization’s reputation, and loss of future funding opportunities. A funder can even revoke previously-awarded grant funding, requiring the organization to pay back any money already received. That’s not a risk most organizations can afford to take.

Understanding grant management best practices

A comprehensive grant management plan is the foundation for successful grant execution. Ideally, this plan should be considered and developed alongside your grant application. Some funders even require a grant management plan to be included in those materials.

Key elements of a grant management plan

A strong grant management plan includes:

• Clear project goals and objectives
• Compliance and risk management
• Financial tracking
• Evaluation and reporting
• Communications

Altogether, these five elements serve as both a roadmap for implementation and a framework for accountability. Grant management best practices include setting clear expectations for how and when your grant requirements will be fulfilled, and they’re worth exploring in more detail.

1. Clearly define your project goals and objectives

A well-defined vision for success is the first step for both securing a grant and managing it effectively. Setting SMART (Specific, Measurable, Achievable, Realistic, and Time-bound) goals as part of your grant proposals gives your project a clear focus with measurable outcomes.

All staff, board, and even some volunteers who are involved in the grant or the project it funds should be well-versed in your project goals, understanding exactly what and how you aim to accomplish. 

Clearly established and well-communicated objectives make it easier for all project leaders to make informed decisions regarding fund allocation. They also help to ensure that your project is aligned with the grantor’s priorities from the start, minimizing questions about fund allocation and management throughout the lifecycle of the grant. 

2. Ensure compliance with grant terms

Rigorous compliance with grant terms is perhaps the most important element of any grant management plan.

Grantmaking organizations typically outline specific stipulations and requirements as a condition of their funding. These terms should be reviewed thoroughly before accepting a grant to ensure that your organization can comply. You should also revisit the grantmaker’s requirements periodically throughout the life of the grant.

All organizational grant recipients must understand allowable and unallowable expenses—especially for government-funded grants—as well as reporting and communication requirements.

While many grantmakers have similar guidelines, the specifics on timing and format can vary. For an organization, some of those details may not seem very important. However, they should not be overlooked, as funders frequently make future funding decisions based on how well recipient organizations follow their guidelines when submitting grant proposals and throughout the grant funding cycle. Failure to comply with grant guidelines can lead to penalties, damage to the funder relationship or your organization’s reputation, or even loss of funding.

Tips to maintain compliance throughout the life of the grant

• Regularly review grant agreements to make sure you’re on track and on time to meet your obligations.
• Align spending with grant stipulations, reporting deadlines, and budget constraints.
• Assign a compliance officer or team member to oversee the organization’s adherence to all grant terms.
• Identify risks to compliance requirements and create a plan for mitigating those risks.

3. Maintain accurate financial reports and records

The budget that you submit as part of your grant proposals should outline any expected project expenses such as personnel, equipment, supplies, and overhead costs. After you have been awarded a grant, you will need to track spending for each of these expenses as well as any unexpected costs.

Transparency is an important part of the grant process. By implementing meticulous financial records and tracking systems, you can account for every dollar, and you’ll be ready if and when a funder requests that information. This helps to prevent mismanagement of grant funds, establishes your financial track record, fulfills grant requirements, and builds trust with funders.

If you receive funding directly, your financial tracking should include whether grant money is utilized for each project expense or if the funding comes from another source. You will also need to track the total amount of grant funding, monitoring the spend down as the funds are allocated and depleted.

If your grant funds are rolled out through a reimbursement system, this tracking is just as critical. Consistent tracking and documentation is required to ensure that you receive all expected funds.

Best practices for financial tracking

• Use grant-specific accounting codes to track expenditures.
• Segregate funds to prevent misallocation.
• Conduct regular financial audits to identify discrepancies and make corrections as necessary to maintain financial integrity.

4. Make evaluation part of your grant management process

For many grantmaking organizations, community impact is a big motivator. They want to know that their philanthropic investments make a difference—and not just in the receiving organizations, but in the communities you serve.

Periodic reporting on financial and programmatic progress informs grantmakers of how your project is doing and how their funding has helped. Most grant requirements call for regular reporting throughout the project and at the end of the grant lifecycle as well. 

Internally, ongoing performance tracking helps to ensure that your funded projects remain on schedule and within budget. Regular evaluations can also identify challenges early and allow for timely course corrections.

When it comes to evaluation, grant management best practices include internal and grantor reports that track and reflect clear, measurable progress outcomes that align with your project goals and objectives. Your funder may provide reporting deadlines, or you may set the schedule yourself. If you experience setbacks, address them directly, and note the plan for their resolution.

Tips for Your Evaluation and Reporting Strategies

• Develop a data collection plan for financial and impact metrics.
• Conduct mid-project assessments to track progress and address challenges.
• Perform a final evaluation to document lessons learned and inform future grant applications.

5. Foster transparent communication with stakeholders

While the document-heavy process of grantseeking and grant management can seem impersonal at times, human decision-makers and interests are present on both sides of the equation. The best funders for your organization are those with whom you’ve built a relationship of trust and shared philanthropic interests.

Some funders like only periodic updates on your financial and programmatic progress, while others may want deeper involvement, from formal reports to site visits and engagement with other stakeholders. Understanding your grantor’s communication preferences and responding accordingly allows you to build stronger organizational relationships and, in turn, increased funding opportunities.

At times, you may also need to have more difficult conversations. If the project being funded is facing insurmountable challenges or unexpectedly shifting directions, a frank conversation with the grantor is in order to decide how to proceed with funding. Some grantors will allow a grant extension or modification to accommodate those changes, while others may take a different approach and close the grant early.

Grant management communications best practices

• Provide consistent updates on project progress, challenges, and successes.
• Engage stakeholders through meetings, reports, and impact stories to showcase the grant’s value.
• Schedule regular reports and check-ins to maintain transparency and accountability.

How technology aids in efficient grant management

While some organizations may effectively manage a grant with a couple of spreadsheets and a physical filing system, most organizations—and most grants—benefit from a more sophisticated approach. Investing in grant management software can help to streamline documentation, automate deadline reminders, improve oversight and accountability, and facilitate seamless operations. This is especially important if your organization is managing multiple grants at one time.

Common applications useful for grant management include grant management software, constituent relationship management (CRM) software, accounting software, and program or project management trackers. These tools, when utilized well, can automate tracking and reporting functionalities, increase the accuracy of your financial management, and improve the efficiency of your grant management process.

For more information on how technology can help you in the grant proposal process, watch our webinar, Beyond Uncertainty: New Paths to Fundraising and Grant Success with Cherian Koshy, VP of Market Insights at Kindsight, and Lauren Steiner, CEO of Grants Plus.

Invest in a skilled grant management team

Managing grant funding is not always easy, but when you consider the potential impact of the funding made available through those grants, the effort is worthwhile. To make the process easier, invest in the people and skills necessary to manage your grants well.

A knowledgeable team enhances grant execution and ensures that funding is used strategically, but effective grant management can’t be contained to one position or department. It requires buy-in from across the organization, including leadership, fundraising, program management, finance team, accounting, and human resources.

Because your grant management process spans the whole organization, clear roles and responsibilities are essential. Specific individuals and roles should be assigned to oversee program execution, finance, compliance, and reporting. Regular, ongoing training helps to ensure that everyone has the knowledge and skills necessary to do their part, and cross-functional collaboration is key to efficiency and effectiveness.

Additional grant management best practices and tips

Here are two important final tips to help you implement an effective nonprofit grant management process at your organization.

Start with small grants to build your grant management expertise

If you’re new to grant writing, funding, and management, the grant process can be overwhelming. For some non-profit organizations, it may be helpful to start with small grants from local grantmaking organizations. Working with a smaller organization can allow you to develop and practice your grant fundraising and management skills while building your capacity to manage larger funds.

Leverage your current grants for future funding opportunities

With every successful grant, your organization builds its grant-seeking résumé. Organizations that demonstrate accountability and effectiveness are more likely to secure future funding opportunities. As you manage your existing grants, compile comprehensive records detailing your expenditures and impact—-not just for current funders, but for future grantors as well. Document all financial transactions and your processes as well.

Conclusion

Implementing grant management best practices requires strategic planning, strict compliance, and continuous monitoring.

While managing a grant is no small task, implementing these best practices is essential. With effective grant management, organizations can maximize the impact of their grants, maintain strong relationships with funders, and, most importantly, secure sustainable funding for future initiatives to keep their mission going long into the future.

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Carolyn Wynnack

Carolyn is a nonprofit-focused writer with more than 10 years of experience in non-profit and higher education event management, program development and management, prospect development, training, and data analysis.